Gov. Newsom froze $1 billion in homeless aid. Will it hurt SLO County service providers?
A recent pause in homelessness funding made by Gov. Gavin Newsom could lead to problems for San Luis Obispo County’s response to homelessness, local officials and service providers said.
Newsom announced earlier this month that he will withhold $1 billion in state funding for cities and counties in a response to what he saw as a failure by local leaders to prove they can actually get people off the streets and into homes.
“Californians demand accountability and results, not settling for the status quo,” Newsom said in a statement. “As a state, we are failing to meet the urgency of this moment.”
Local leaders say SLO County programs can survive without the funding for a limited time. But if the freeze lasts too long, it could thwart the start of new homelessness initiatives.
Where the funding freeze will take place
The frozen funding was supposed to come from the Homeless Housing, Assistance and Prevention Program (HHAP).
Since 2019, more than $2 billion annually has been set aside for flexible homeless spending by local agencies through HHAP, though this year, that funding was conditional to submitting an action plan in June to curb homelessness.
According to data submitted by the counties, however, these plans would result in only a 2% decrease in homelessness across the state by 2024, which Newsom blamed on a lack of aggressive action from local leaders.
“At this pace, it would take decades to significantly curb homelessness in California — this approach is simply unacceptable,” Newsom said in a statement. “Everyone has to do better — cities, counties, and the state included.”
Newsom called government leaders together for a meeting in mid-November, the release said, to coordinate an approach that will deliver faster results. He didn’t provide a timeline for when funding would be released or what local agencies would need to do to receive the money.
SLO County can last a few months without the funding, county principal homelessness analyst Joe Dzvonik said. But by February or March, the county needs the money to kick-start local projects such as building a tiny home village or expanding outreach services, he said.
When SLO County receives a HHAP grant, it allows service providers to apply for pieces of funding to pursue projects that address homelessness. The county planned to open its application in February or March, Department of Social Services program manager George Solis said, so the freeze wouldn’t derail the county’s plans until then.
As of now, Dzvonik said he supports the decision to freeze the grant so the state can create a more effective plan to address homelessness.
“I see it as a reasonable thing to do as long as it doesn’t go on,” Dzvonik said. “It’s an opportunity to bring the whole state together and develop a statewide strategy.”
At the meeting, Dzvonik hopes Newsom and the counties discuss the way funding is distributed.
Right now, the state doesn’t offer “steady, programmed” homelessness funding to counties. Instead, it distributes money in short bursts at different times each year.
“Homelessness is treated over and over again like an emergency, but it should actually be treated like a long-term investment with stable, predictable patterns in the funding,” Dzvonik said.
The current funding model makes it riskier for local service providers to create long-term support programs.
For example, the El Camino Homelessness Organization and the county spent millions of dollars converting a Paso Robles Motel 6 into permanent supportive housing coupled with nightly shelter options, Dzvonik said, but the state hasn’t promised any guaranteed, annual funding for recurring costs like staff salaries, utilities and rent. As a result, the county and the organization are constantly scrambling for new funding to keep the lights on, Dzvonik said.
If counties received stable, reliable funding, they could develop permanent programs to address homelessness more effectively, Dzvonik said.
What does the freeze mean for SLO County?
In its June grant application, SLO County officials said they expected unsheltered homelessness to increase by 53% from 2020 to 2024 due to an expected recession and an increase in rent prices. Though the funding wouldn’t decrease homelessness, county staff wrote in their report that it would help “bend the curve.”
Without the funding, unsheltered homelessness would have increased to 60%, Dzvonik said.
“It’s still an increase, but it’s not as much of an increase as what it would have been,” Dzvonik said.
He noted that the 53% increase is no longer accurate, either.
On Aug. 9, the SLO County Board of Supervisors passed an action plan to reduce homelessness by half by 2027. To achieve this goal, the county will increase its collaboration with cities and service organizations, expand interim housing like pallet homes, develop permanent affordable housing, improve its data collection system and grow mental health and addiction services, Dzvonik said.
The county submitted its HHAP grant application more than a month before the new five-year plan was approved — so the county couldn’t include the latest metrics in the grant application.
Dzvonik isn’t ready to pinpoint how much homelessness might decrease by 2024 yet, because the new plan operates through 2027.
All told, the state promised to give SLO County $4.3 million in HHAP 3 funding, Dzvonik said, and already awarded 25% of that in June.
The county will use that first 25% to improve its Homeless Management Information System. The other 75% will be awarded to local service providers to pursue projects like a tiny home village.
The county is scheduled to open the funding application to service providers in February or March, so SLO County can survive the funding freeze until then. But if Newsom continues to withhold the funding far into 2023, local service providers will start to feel an impact.
Local service provider: Cuts in funding can cause ‘spiral’ of homelessness
Janna Nichols, executive director of the 5Cities Homeless Coalition, said this funding freeze will hurt the ability of local service providers to combat homelessness in SLO County.
“You can’t address (homelessness) with a single action, and you can’t look at it from a statewide level,” Nichols said. “Every community is struggling in a different way with different stuff.”
Nichols said while she understands that this is Newsom’s means of applying political leverage to get the result he wants, withholding funding from service providers is not the way to do it.
“I can appreciate that (Newsom) wants to provide some leverage to get some movement,” Nichols said. “But let’s build some housing that people can afford.”
Additionally, the county and local service providers have only recently spent most of the COVID-19 recovery and American Rescue Plan Act funding, Nichols said, which means HHAP funding has largely not been used in SLO County. Delays in using the money may have contributed to Newsom’s decision to freeze HHAP funding across the state.
“I think we’re only now actually getting to the conversation of what to do with HHAP,” Nichols said. “We have applied and were awarded the first round, but the rest of the funding I think is still yet to be decided.”
Still, Nichols said service providers like hers have yet to receive any of that first-round money, as the contract that would set the rules for how it will be spent has not yet been established.
The county also has yet to issue a request for proposals for the second and third rounds of HHAP funding, Nichols said. Rounds three, four and five of the funding, Nichols said, are where the freezes in funding will take place.
5Cities Homeless Coalition was awarded around $350,000 in HHAP funding between direct awards from the county and the Continuum of Care’s division of funding it received, Nichols said, which is slated for use in homeless youth outreach and prevention once their contract for the funding is finalized.
Nichols said her organization intends to use some of its HHAP funding on launching its non-congregate cabin shelter program in the South County, a project that, without HHAP funding, would not have ongoing funding past 2023.
With SLO County suffering from what Nichols called an “exodus” of low-income workers who have been priced out of the local housing market and Newsom’s cut in funding, she said a “spiral” of homelessness issues could follow.
“We have seen a significant uptick in the last month and a half in our homeless prevention requests — people asking for rental assistance (who are) experiencing significant rent jumps,” Nichols said.
Decreases in funding means less money for homeless prevention, fewer available shelter beds — which Nichols said can only house around 20% of the county’s current homeless population — and, eventually, more people living unsheltered without adequate support resources.
“The outcome is (that) for providers like me, we’re catching people as they fall,” Nichols said. “If we don’t have the homeless prevention dollars to help with rent subsidies, we have a problem. If we don’t have the dollars to help move people back into housing, we have a problem.”
This story was originally published November 16, 2022 at 8:00 AM.
